Use the Following to Answer Questions

question 105

Multiple Choice

Use the following to answer questions:
Figure: Foreign Trade Market
-If quotas on sugar were eliminated in the United States, domestic production of sugar would fall. Why is this a benefit in economic terms for the United States?
I. Resources are freed up that could be used more efficiently elsewhere.
II. It is beneficial because it allows foreign producers of sugar to earn income and thus those countries are better off.
III. U.S. consumers are able to enjoy increased consumer surplus because of the lower prices of imported sugar.

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, II, and III

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Definitions:

Dominant Strategy

A strategy in game theory that is best for a player regardless of the strategies chosen by the other players.

Nash Equilibrium

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of the others remain unchanged.

Repeated Games

A situation in strategic interactions where players engage in the same game multiple times, allowing for strategy adjustments based on previous outcomes.

Nash Equilibrium

A solution concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged.